HCA Healthcare Inc. (NYSE:HCA)

Inventory Turnover

The inventory turnover ratio exhibited fluctuations over the period. Starting at 4.65 in 2017, it slightly decreased to 4.46 in 2018, then increased modestly to 4.59 in 2019. A notable decline to 4.13 occurred in 2020, followed by a rebound to 4.77 in 2021, showing variability but ending above the initial level.

Receivables Turnover

This ratio showed a consistent upward trend from 6.71 in 2017 to a peak of 7.31 in 2020, before a slight decline to 7.26 in 2021. The gradual increase indicates improved efficiency in collecting receivables over time.

Payables Turnover

The payables turnover ratio increased from 2.81 in 2017 to 3.00 in 2018, then slightly decreased to 2.92 in 2019. A more significant drop occurred in 2020 to 2.37, with a further slight decrease to 2.31 in 2021. This suggests a trend toward slower payment of payables in recent years.

Working Capital Turnover

The working capital turnover ratio demonstrated marked volatility. It rose sharply from 11.42 in 2017 to 17.65 in 2018, decreased to 14.93 in 2019, and continued to decline to 14.20 in 2020. A minor recovery to 14.84 took place in 2021. The overall trend indicates fluctuations in the efficiency of utilizing working capital.

Average Inventory Processing Period

The number of days inventory remains processed increased from 78 days in 2017 to a peak of 88 days in 2020, indicating slower inventory turnover. However, it improved substantially to 76 days in 2021, the shortest period in the five-year span, suggesting improved inventory management.

Average Receivable Collection Period

This period showed consistent improvement, falling from 54 days in 2017 to 50 days by 2020 and maintaining that level in 2021, reflecting quicker collection of receivables.

Operating Cycle

The operating cycle fluctuated around the low 130s, rising from 132 days in 2017 to a peak of 138 days in 2020, then declining to 126 days in 2021. The decline in 2021 suggests improved overall operational efficiency.

Average Payables Payment Period

The average time taken to pay payables decreased from 130 days in 2017 to 122 days in 2018, then fluctuated slightly to 125 days in 2019. It increased markedly to 154 days in 2020 and further to 158 days in 2021, indicating a lengthening of the payment period, possibly as a liquidity management strategy.

Cash Conversion Cycle

The cash conversion cycle increased from 2 days in 2017 to 13 days in 2018, then decreased to 7 days in 2019. It turned negative in 2020 at -16 days and further declined to -32 days in 2021. The negative cash conversion cycle in the last two years signals that the company is collecting cash from customers faster than it pays its suppliers, which is generally favorable for cash flow.

Supplies

The value of supplies displayed a consistent upward trend over the five-year period. Starting at 7,316 million US dollars at the end of 2017, it increased each year, reaching 9,481 million US dollars by the end of 2021. This represents a significant growth, with the most notable annual increase occurring between 2020 and 2021.

Inventories

Inventories also increased overall from 1,573 million US dollars in 2017 to 1,986 million US dollars in 2021. The data shows a steady rise each year until 2020, when inventories reached 2,025 million US dollars, followed by a slight decline in 2021. This suggests a peak in inventory levels in 2020 before a modest reduction.

Inventory Turnover

The inventory turnover ratio exhibited some fluctuations throughout the period. It started at 4.65 in 2017, decreased gradually to a low of 4.13 in 2020, indicating slower inventory movement relative to sales or usage during that year, and then rebounded sharply to 4.77 in 2021, surpassing the 2017 level. This rebound may indicate improved efficiency in managing inventory in the most recent year.

Revenues

Revenues demonstrate a consistent upward trend over the analyzed period. Starting at approximately 43.6 billion US dollars in 2017, revenues rose steadily each year, reaching nearly 58.8 billion US dollars by the end of 2021. The most notable increase occurred between 2020 and 2021 with a growth of over 7 billion US dollars, indicating a strong recovery or expansion in the latest year.

Accounts Receivable

Accounts receivable also show an overall increasing trend, starting from 6.5 billion US dollars in 2017 and rising to about 8.1 billion US dollars by 2021. There was a slight dip in 2020, where the value decreased marginally compared to 2019, before increasing again in 2021. This trend suggests fluctuations in collections or credit sales, but an upward movement in general, aligning with revenue growth.

Receivables Turnover Ratio

The receivables turnover ratio exhibited gradual improvement during the review period. It increased from 6.71 in 2017 to a peak of 7.31 in 2020, indicating enhanced efficiency in collecting receivables relative to credit sales. However, in 2021, the ratio slightly declined to 7.26, suggesting a minor reduction in collection efficiency or changes in credit terms despite the revenue increase.

Supplies

The supply levels show a generally increasing trend from 2017 to 2021. Starting at 7,316 million USD in 2017, supplies increased steadily each year, reaching 9,481 million USD in 2021. Although there was a slight dip in 2020 compared to 2019, the overall trajectory is upwards, indicating growing inventory or stock levels over the period analyzed.

Accounts Payable

Accounts payable figures have also increased consistently throughout the period. Beginning at 2,606 million USD in 2017, payables rose to 4,111 million USD by 2021. This upward movement suggests an increase in outstanding liabilities to suppliers or creditors, aligning with the growth in supplies and possibly reflecting expanded operations or purchasing activities.

Payables Turnover

The payables turnover ratio exhibits a declining trend over the five years. It started at 2.81 times in 2017, peaked slightly at 3.00 times in 2018, and then gradually decreased to 2.31 times by 2021. This decline indicates that the company is taking more time to pay its suppliers relative to cost of goods purchased, which could reflect extended payment terms or changes in cash management strategies.

The financial data reveals several noteworthy trends over the five-year period under review.

Working Capital

Working capital demonstrates a fluctuating but overall upward trend from 2017 through 2021. It decreased from $3,819 million in 2017 to $2,644 million in 2018, indicating a contraction in liquid assets relative to current liabilities during that year. However, it subsequently increased in the following years, reaching $3,960 million by 2021, surpassing the starting point in 2017. This growth from 2018 onward suggests strengthening liquidity and improved short-term financial health.

Revenues

Revenues exhibited consistent growth throughout the entire period, moving from $43,614 million in 2017 to $58,752 million in 2021. The increase each year underscores steady expansion in the company’s core operations. Notably, there was a modest revenue rise between 2019 and 2020—a year often marked by significant economic disruptions—indicating resilience. The substantial jump between 2020 and 2021 points to a robust recovery or enhanced business performance.

Working Capital Turnover Ratio

The working capital turnover ratio, calculated as revenues divided by working capital, reflects operational efficiency in utilizing working capital to generate sales. It rose sharply from 11.42 in 2017 to 17.65 in 2018, largely due to the decrease in working capital combined with rising revenues. Afterwards, it decreased to 14.93 in 2019 and remained relatively stable around 14.2–14.84 through 2020 and 2021. This indicates that despite higher working capital, revenue generation per unit of working capital stabilized at a solid level after 2018.

In summary, the company improved its liquidity position after an initial dip in 2018, while maintaining consistent revenue growth. The working capital turnover ratio's peak in 2018 followed by stabilization may reflect a normalization of operational efficiency as working capital levels recovered. Overall, these trends suggest enhanced resource management and sustained business growth over the period analyzed.

Inventory Turnover

The inventory turnover ratio displayed moderate fluctuations over the five-year period. Starting at 4.65 in 2017, it slightly declined to 4.46 in 2018, indicating a minor reduction in the frequency of inventory replacement. The ratio rebounded to 4.59 in 2019 but declined again in 2020 to its lowest point at 4.13, possibly reflecting a slowdown in inventory movement during that year. By 2021, the ratio increased notably to 4.77, surpassing the initial 2017 figure, suggesting enhanced efficiency in inventory management or increased sales volume relative to inventory held.

Average Inventory Processing Period

The average inventory processing period, expressed in days, exhibited an inverse pattern relative to the inventory turnover ratio, as expected. It began at 78 days in 2017, increased to 82 days in 2018, and marginally decreased to 80 days in 2019. A more pronounced extension occurred in 2020, reaching 88 days, indicating slower inventory turnover or longer holding times. In 2021, this period contracted significantly to 76 days, the shortest span in the observed range, which aligns with the highest inventory turnover ratio recorded in the same year. This suggests an improvement in inventory management efficiency towards the end of the period.

The data reveals trends in both receivables turnover and the average receivable collection period over a five-year span.

Receivables Turnover Ratio

The receivables turnover ratio exhibits a consistent upward trend from 6.71 in 2017 to a peak of 7.31 in 2020, followed by a slight decline to 7.26 in 2021. This overall increase indicates improved efficiency in collecting accounts receivable, suggesting that the company was able to convert its receivables into cash more frequently each year.

Average Receivable Collection Period

This metric inversely mirrors the turnover ratio, showing a gradual decrease in the number of days required to collect receivables, moving from 54 days in 2017 down to 50 days by 2020 and maintaining that level in 2021. The reduction in collection period further supports the interpretation that the company enhanced its receivables management, enabling faster cash inflows.

Overall Insights

The simultaneous improvement in receivables turnover and decline in collection period denotes enhanced operational efficiency regarding credit and collections. Despite a minor dip in turnover ratio in the last year reported, the company sustained its efficiency gains in receivable collection timing, which is positive for liquidity and cash flow management.

Average inventory processing period

The average inventory processing period exhibited moderate fluctuations over the analyzed period. Starting at 78 days at the end of 2017, it increased to a peak of 88 days in 2020 before declining to 76 days in 2021, reaching the lowest point within this timeframe. This indicates that inventory turnover accelerated notably in the latest year after experiencing a temporary slowdown.

Average receivable collection period

The average receivable collection period showed a consistent downward trend throughout the period under review. From 54 days in 2017, it steadily declined to 50 days by 2020 and remained stable at this level through 2021. This improvement reflects enhanced efficiency in collecting receivables over time.

Operating cycle

The operating cycle followed a pattern influenced mainly by the movements in inventory processing duration. It increased from 132 days in 2017 to a peak of 138 days in 2020, then contracted sharply to 126 days in 2021. The reduction in 2021 suggests an overall shortening of the time required to convert inventory and receivables into cash, potentially indicating improved operational efficiency in the most recent year.

Payables Turnover

The payables turnover ratio fluctuated over the observed periods. Starting at 2.81 in 2017, it increased slightly to 3.00 in 2018, indicating a higher rate of accounts payable being paid off during that year. However, there was a decline in subsequent years, dropping to 2.92 in 2019 and further decreasing to 2.37 in 2020, ultimately reaching 2.31 in 2021. This trend suggests a gradual slowdown in the frequency at which payables are settled.

Average Payables Payment Period

The average payables payment period exhibited an inverse trend relative to the payables turnover ratio. The period decreased from 130 days in 2017 to 122 days in 2018, indicating quicker payments to suppliers. Following this, the payment period lengthened progressively to 125 days in 2019, then extended significantly to 154 days in 2020, and further to 158 days in 2021. This rising trend implies that the company progressively took longer to pay its suppliers over the last three years.

Overall Insights

The inverse relationship between the payables turnover ratio and the average payables payment period is consistent with standard financial principles, where a lower turnover corresponds to a longer payment period. The extension of the payment period in the recent years might indicate a strategic effort to conserve cash or manage liquidity more tightly. However, this could also affect supplier relations or credit terms if prolonged beyond standard industry practice.

Average Inventory Processing Period

The average inventory processing period experienced some fluctuations over the five-year span. It increased from 78 days in 2017 to 82 days in 2018, slightly decreased to 80 days in 2019, rose appreciably to 88 days in 2020, and then notably shortened to 76 days in 2021. This pattern suggests some variability in how quickly inventory is managed, with a peak delay around 2020 followed by a more efficient processing period by the end of 2021.

Average Receivable Collection Period

The receivable collection period showed a consistent downward trend, decreasing from 54 days in 2017 to 50 days by 2020 and maintaining 50 days in 2021. This steady improvement indicates enhanced efficiency in collecting receivables over time, contributing positively to the company’s liquidity position.

Average Payables Payment Period

There was a general increase in the average payables payment period across the period examined. Starting at 130 days in 2017, this period declined slightly to 122 days in 2018, then showed a modest increase to 125 days in 2019, followed by significant extensions to 154 days in 2020 and further to 158 days in 2021. This trend reflects a lengthening of the time taken to pay suppliers, possibly indicating tighter cash management or negotiation of more favorable payment terms.

Cash Conversion Cycle

The cash conversion cycle (CCC), which integrates inventory, receivables, and payables periods, showed considerable volatility. It started close to zero at 2 days in 2017, rose to 13 days in 2018, and decreased to 7 days in 2019. Notably, the CCC turned negative in 2020 at -16 days and further improved to -32 days in 2021. A negative CCC generally implies that the company is able to convert its resources into cash faster than it needs to pay its suppliers, suggesting enhanced operational efficiency and potentially stronger cash flow management in recent years.